The holiday season is upon us, so that means it is time for our annual letter! We are highlighting a few
things that we feel might be pertinent to planning for the upcoming tax season. Links are included where
you can find more relevant information. Feel free to reach out to our office with any questions.
Be on the lookout in the next few weeks for our client organizer either in the mail or your portal. We
provide it to help you gather your documents relevant to your tax return. Please complete the
questionnaire at a minimum as it helps us discuss tax planning items
Mileage Rate: For those of you who need to reimburse yourself for business mileage before year end, the
2024 rate is $0.67 (the 2025 rate has not been published as of this letter). Be sure to ensure your mileage
log records are complete.
Corporate Transparency Act/Beneficial Ownership Interest: Please see our separate email that was sent
November 19, 2024 regarding this new filing requirement for almost ALL business owners (not sole
proprietorships). https://www.fincen.gov/boi.
AS OF DECEMBER 4, 2024, a court injunction has been filed effectively pausing enforcement of BOI
reporting. This does not mean the law itself has been repealed or declared unconstitutional. It only
means the enforcement for BOI reporting has been suspended until either the injunction is lifted, or the
law is changed by Congress. If you have not filed a BOI report yet, legally you do not have to. However,
be aware of any updates to the court case and injunction and be prepared to act on new guidance.
Senior Property Tax Exclusion
Income limits for senior property tax exemptions have been adjusted for all
Washington state counties as of 2024. The basic exemption now includes income levels up to $65,000 for
Kitsap County, and $64,000 for Pierce County, for seniors 61 or older. The exemption is only available for
primary residences and online applications are now available.
Kitsap: https://www.kitsapgov.com/assessor/Pages/SeniorDisabledExemptionDeferral.aspx
Pierce: https://www.piercecountywa.gov/702/Senior-Citizens-Or-People-with-Disabilit
Energy efficient updates to your home
If you are looking to update windows, doors or certain HAVC
systems, effective January 1st, 2023, the energy credit has been changed to a credit of $1,200 each year for certain indoor improvements, and $2,000 per year for certain outdoor improvements for a maximum
possible credit of $3,200 annually. There are limits to the credit amount per “improvement” and when
labor costs are eligible to be included. Below is a list of all the available credits and rebates for energy
related improvements organized by state: Database of State Incentives for Renewables & Efficiency® –
DSIRE (https://dsireusa.org).
Change in RMD for IRA & IRA Beneficiary Rules
Reminder, the beginning age for taking an RMD (required
minimum distribution) on IRAs (non-Roth) moved to 73. The penalty for failure to draw the RMD has been
moved down to 25% (from 50%), or only 10% if remedied within the correction window. If you are a
beneficiary of an IRA or inherited an IRA, the rules vary depending on if you are a designated or non-designated beneficiary, among other factors. Please contact our office with any questions.
529 Education Plan Update
Beginning in 2024, funds in a 529 account are able to be rolled by the account beneficiary into a Roth IRA under certain conditions. In order to rollover, the 529 account must have been in existence for at least 15 years and had contributions five or more years ago, is subject to yearly Roth contribution limits, and has a lifetime rollover limit of $35,000. However, the income limitations to contribute to the Roth do not apply to the rollover of a 529 to a Roth IRA.
Washington State capital gains tax of 7%
This is not new for 2024, but we wanted to remind you all the
same. The 7% tax assessed for individuals relates to; the sale or exchange of long-term capital assets such
as stocks, bonds, business interests, or other investments and tangible assets that generate over $270,000
in gains (excluding real estate sales). Specifically, individuals can be liable for the tax because of their
ownership interest in a pass-through or disregarded entity that sells or exchanges long-term capital assets.
The tax only applies to gains allocated to Washington state. For more information, please visit
https://dor.wa.gov/taxes-rates/other-taxes/capital-gains-tax
1099-K’s may be received if you received funds via electronic payments such as Venmo, Facebook,
PayPal, Ebay, Etsy etc.
For 2024, payments totaling $5,000 or more on third party payment platforms (ie Venmo, PayPal, Ebay, online marketplaces) will generate a 1099-K form to report the income. The previous requirements to generate this form were either 200 transactions or more that totaled over $20,000. Eventually, this requirement will drop to a threshold of $600. Personal transactions such as bill payments, birthday/holiday gifts, sharing costs of meals, should not be included in this total as they are not taxable. More information can be found https://www.irs.gov/newsroom/irsannounces-delay-in-form-1099-k-reporting-threshold-for-third-party-platform-payments-in-2023-plans-fora-threshold-of-5000-for-2024-to-phase-in-implementation
IP PIN – Identity Protection PIN: These are issued by the IRS either by request or identity theft reported to
the IRS. A new IP PIN is required each year in order to file your taxes if you have either of these situations.
https://www.irs.gov/identity-theft-fraud-scams/retrieve-your-ip-pin
IRS Account & ID ME: IRS now allows more access to information, notices and responses through an online account. We recommend setting up your ID ME account. https://help.id.me/hc/enus/articles/8214940302999-IRS-and-ID-me
Protect Yourself from Scams: We are seeing an increase in scams either solicited by mail, email, or over
the phone. We wanted to highlight a few red flags to look for to protect yourself and loved ones. The most important piece is to go to the source, do not rely on an email or call. Login to your account, call the
company back at a number YOU have, not one they give you or on your caller ID.
- Sense of urgency: Scammers want you to act impulsively so they create an urgent situation when in reality there is none. They may try to convince you that as supposed investment is a “limited time offer” to push you to act quicker. Always research investments and investment opportunities before sending money.
- Isolation: Often with investment scams, the scammer will try and prevent you from contacting someone else by saying something along the lines of “only a few people know about this investment, we need to keep it quiet”. Reach out to someone you trust to walk through the situation for another perspective before acting on anything.
- Odd payment forms: Always be wary of anyone asking for official payments using weird payment methods. Government offices, bill collectors, etc. will never ask to be paid by gift card, Bitcoin, Venmo, Zelle, wire transfer, or anything similar. Especially with gift card or Venmo transfers, there is not generally any recourse for customers to get refunds in the case of fraud. While all these payment types are legitimate by themselves, consider the context in which such a payment is being requested, and if it’s unusual in that context.
As always, we sincerely appreciate our clients, they are the best part of what we do. Here’s to another
year!
Michelle, Laurie, Tammi, Kaitlyn, Kim, & Chris
Peterson NW CPA